Report: Tiffany-LVMH deal on the rocks

Michelle Graff

LVMH’s $16 billion acquisition of Tiffany & Co. could be in danger due to the deteriorating situation in the U.S. market, according to a report published Tuesday June 2 by WWD.

Citing sources, the fashion trade publication reported members of the board of LVMH Moёt Hennessy Louis Vuitton met in Paris this week specifically to discuss the deal.

They’re concerned about the COVID-19 pandemic and its impact on the retailer, as well as the ongoing civil unrest in the U.S. following the murder of George Floyd on May 25.

Board members also voiced concerns about the retailer’s ability to cover all its debt covenants, WWD reported.

The Americas remains Tiffany’s largest market, both in terms of sales ($1.92 billion in FY 2019, 43 percent of worldwide net sales) and number of stores (124, including 94 in the United States, as of Jan. 31). Sales in the U.S. market account for 86 percent of sales in the Americas.

The Asia-Pacific region is a close second, with $1.26 billion in sales last fiscal year (28 percent of the global total) and 91 stores.

Tiffany did not respond to request for comment on the report.

In a statement issued Thursday June 4, LVMH confirmed the board of directors meeting took place and that the board “notably focused its attention on the development of the pandemic and its potential impact on the results and perspectives of Tiffany & Co. with respect to the agreement that links the two groups.”

But the Paris-based luxury titan denied rumors it is trying to buy now-cheaper Tiffany shares on the market.

LVMH, which already owns Bulgari, TAG Heuer and Hublot, announced its intentions to buy Tiffany for $135 per share, or $16.2 billion, in November. LVMH said the acquisition would strengthen its position in the jewelry market and bolster its presence in the U.S.

Read full article

Source National Jeweler